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Israel-Palestine conflict threatens world economy, bankers tell Saudi forum

The Future Investment Initiative (FII), often referred to as 'Davos in the Desert,' is being held in Riyadh

Published: Tue 24 Oct 2023, 5:22 PM

Updated: Tue 24 Oct 2023, 5:25 PM

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Saudi Arabia's Crown Prince Mohammed bin Salman (right) and President of South Korea Yoon Suk-Yeol attend the opening session of Saudi Arabia's Future Investment Initiative conference in Riyadh. — Reuters

Saudi Arabia's Crown Prince Mohammed bin Salman (right) and President of South Korea Yoon Suk-Yeol attend the opening session of Saudi Arabia's Future Investment Initiative conference in Riyadh. — Reuters

The war between Israel and Hamas could deal a heavy blow to the global economy, banking titans told a glitzy investment forum in Saudi Arabia on Tuesday.

The dour mood from some of the gathering's most high-profile speakers underscored how the war threatens attempts by the world's biggest oil exporter to diversify its economy away from fossil fuels.

Hamas stormed into Israel from the Gaza Strip on October 7 and killed at least 1,400 people, mostly civilians who were shot or burnt to death on the first day of the raid, according to Israeli officials.

The group also took 222 people hostage, among them elderly people and young children, according to the Israeli authorities' latest count.

More than 5,700 Palestinians, mainly civilians, have been killed across the Gaza Strip in retaliatory Israeli bombardments, the territory's Hamas-run health ministry said.

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"What just happened recently in Israel and Gaza — at the end of the day you put all this together, I think the impact on economic development is even more serious," World Bank President Ajay Banga told the Future Investment Initiative (FII), often referred to as "Davos in the Desert", on Tuesday.

"I think we're at a very dangerous juncture," he added.

The raging war risks drawing in other countries, notably Lebanon, home to the Iran-backed Hezbollah group which has engaged in daily exchanges of fire with Israeli forces.

"If these things are not resolved, it probably means more global terrorism, which means more insecurity, which means more (of) society is going to be fearful, less hope," said BlackRock CEO Larry Fink.

"And when there's less hope we see contractions in our economies."

More than 6,000 delegates are registered for the three-day event that will feature appearances by global banking chiefs and the presidents of South Korea, Kenya and Rwanda, organisers say.

"We're sitting here with the backdrop, which I think we all acknowledge, of the aftermath of the attack in Israel and the events that have been unfolding since, and it's desperately sad. So it's hard not to be a little bit pessimistic," Citi CEO Jane Fraser said.

Riyadh has condemned violence against civilians in Gaza and affirmed its support for the Palestinian cause.

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